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Thursday, December 4, 2014

Will it be a fortune Friday for SAIL?

SAIL CMD CS Verma

BEGINNING its disinvestment plan, the
government will sell its five percent stake in steel major Steel
Authority of India Ltd (SAIL) on Friday (December 5) to mop up about
Rs.1,700 crore while giving retail investors 5 percent discount to
bid price.

The SAIL offering would be the first...

public sector share sale under Narendra Modi-led NDA government after
taking charge from the UPA government in May this year.

The government aims at collecting
Rs.43,425 crore through selling shares in various state-owned firms
during current fiscal.

The SAIL scrip ended 4.67 per cent
lower at Rs.85.65 on the BSE on December 3, while the floor price for
the offer-for-sale would be determined on Thursday.

The sale of five percent stake or about
20.65 crore shares of SAIL at the current market price of Rs.85.65 a
share would fetch the exchequer over Rs.1,700 crore.

As much as 10 percent of the offered
shares has been reserved for retail investors, who can buy shares
worth up to Rs.2 lakh in the share sale. A minimum of 25 percent of
the issue size would be reserved for mutual funds and insurance
companies.

“Retail investors will be allocated
shares at a discount of 5 percent to the bid price entered by them,”
an NSE circular said, adding that the final allocation price may be
below the floor price.

The Cabinet had in July, 2012, approved
a 10.82 per cent stake sale in SAIL. Accordingly, the first tranche
of disinvestment of 5.82 per cent was completed in March, 2013.

The government also plans to sell five
percent stake sale in ONGC, 10 percent in Coal India and 11.36
percent in NHPC.

The Maharatna PSU is India's largest
steel producing company. With a turnover of Rs 49,350 crore, the
company has five integrated steel plants, three special plants, and
one subsidiary in different parts of the country.